Archive forAugust, 2016

As per data from the Bank of England, mortgage approvals for house purchases in the UK fell to 60,912 in July from 64,512 in June, the lowest level since January 2015. The total amount lent for house purchases stood at £10.4bn in July, down from £11.1bn in June.

Japan’s core consumer prices (which exclude volatile fresh food, but include oil products) dropped 0.5% y-o-y in July after a 0.4% decline in June. This marks the biggest annual drop in over three years and the fifth consecutive month of decline. Weak data has pressured the Bank of Japan to expand an already huge stimulus programme.

As per data released by Destatis, Germany’s GDP grew 0.4% q-o-q in Q2 2016, in line with the preliminary estimate, after expanding 0.7% q-o-q in Q1 2016. The growth was largely due to better foreign trade and a rise in spending. Exports increased 1.2%, while imports dropped 0.1%; net trade was the highest contributor to GDP in Q2 2016. On a y-o-y basis, Germany’s GDP expanded 1.8% after growing 1.9% in Q1 2016.

The Scottish government stated leaving the European Union (EU) would weaken Scotland’s economy by £1.7–11.2bn by 2030, depending on the new trade relationship adopted by Britain. Scotland has had good trade relations with the EU, accounting for around £12bn exports in the EU in 2014, which represents 42% of its total exports.

According to the World Travel and Tourism Council (WTTC), Brexit would not affect the UK’s tourism sector in the near term. The organisation expects the sector to grow 3.6% over the year vis-à-vis the projected 3.1% rise in tourism globally. However, the WTCC said that fewer jobs would be created in the long term.

Net borrowing in the public sector in the UK came in at a surplus of £1bn in July, compared with £1.2bn in July 2015, despite strong corporation tax receipts. The economist estimated a surplus of £1.6bn. For the financial year to date, public borrowing was 11.3% lower than in the previous year. Conversely, public sector debt at the end of July stood at £1,604.2bn, around 82.9% of the GDP, and £35.3bn higher than in July 2015.

As per the Office for National Statistics, the UK’s retail sales grew 5.9% y-o-y in July, above economists’ forecast of a 4.2% rise, after gaining 4.3% in June. Sales, excluding auto fuel, surged 5.4% y-o-y in July compared with the 3.9% growth in June. The increase in sales was primarily led by warmer weather conditions and a weaker pound.

As per the Office for National Statistics, the UK’s unemployment remained at 4.9% in the three months to June, in line with market expectations. The number of individuals in work rose 172,000 to 31.75 million, while the number of unemployed individuals declined 52,000 to 1.64 million.

As per the Office for National Statistics, the UK consumer price index (CPI) climbed 0.6% y-o-y in July, after a 0.5% rise in June, marking the highest level since November 2014. This was due to higher prices for fuel, alcoholic beverages and accommodation services. On m-o-m basis, prices fell 0.1% after rising 0.2% in June.

As per property tracking website Rightmove, the average asking price for a house in the UK dropped 1.2% m-o-m in August to £304,222, after declining 0.9% in July, marking the biggest drop since November 2015. On a y-o-y basis, house prices advanced 4.1% following a 4.5% rise last month.

A minority of those aged 55 and over are withdrawing too much from their pension pots, the industry has warned. However, after the first full year since pension freedoms began, the Association of British Insurers (ABI) said most people were being sensible. Well over half of those withdrawing money from their pots in the first three months of 2016 took out 1% or less of their value. But at the same time 3,379 people took out more than 10% from their pensions. Nevertheless that number is likely to include people who are investing the money elsewhere, or who may have multiple, small pension funds.

As per the National Bureau of Statistics, industrial production in China increased 6.0% y-o-y in July after growing 6.2% in June. The reading was below the market expectations of a 6.2% gain. Retail sales rose 10.2% y-o-y, lower than the expectations of a 10.5% surge and below the 10.6% growth recorded in June. The weak data further increased concerns of slowdown in China’s economy.

As per the latest survey by the Royal Institution of Chartered Surveyors, UK’s house price balance dropped to +5 in July from +15 in June, marking the lowest reading in 39 months. This is mainly due to uncertainty in the market after Brexit and adjustments to the latest measures announced by the Bank of England.

As per the Office for National Statistics, the UK’s industrial output grew 2.1% in Q2 2016, the fastest quarterly increase since Q3 1999 and in line with preliminary estimates. The gain in output was ascribed to a 2.3% m-o-m jump in production in April. Industrial output in June rose 0.1% m-o-m after a 0.6% fall in May.

As per the British Retail Consortium (BRC), the UK’s like-for-like sales rose 1.1% y-o-y in July after a 0.5% fall in June, higher than the expectation of a 0.7% decline. The gain in sales was largely led by warm weather conditions and heavy discounts offered by retailers.

On Friday, Bank of England Deputy Governor Ben Broadbent informed there may be further rate cuts later this year as he closely monitors the UK labour market in the aftermath of June’s referendum to leave the European Union. The comments came following a reduction in the Bank of England’s prime interest rate to 0.25% on Thursday.

The Bank of England (BoE) has cut UK interest rates to a record low of 0.25% from 0.50%, marking the first cut since 2009. BoE reduced its growth forecast for 2017 to 0.8% from the previous estimate of 2.3%, primarily due to the negative impact of Brexit on growth prospects. The Bank expanded its quantitative easing program, and plans to buy £60bn worth of UK government bonds and £10bn worth of corporate bonds. Additionally, the Bank announced further measures to fuel the UK economy, including a £100bn scheme to drive banks to offer low interest rates to households and businesses.

As per data from Markit, the UK business activity index for services declined to 47.4 in July from 52.3 in June, marking the lowest monthly drop since July 1996. This was the first decline in service activity since December 2012 and the worst one since March 2009. The agency stated the plunge was a result of uncertainty pertaining to Brexit.

As per the British Retail Consortium, shop prices in the UK fell 1.6% y-o-y in July, after a 2.0% drop in June, marking the slowest rate of decline since August 2015. Food prices plunged 1.2% y-o-y, while non-food prices dropped 2.2%. The price trend can be ascribed to intensifying competition among retailers. Meanwhile, non-food deflation decelerated to 2.2% in July from 2.8% in June.

As per Markit, UK’s manufacturing PMI plunged to 48.2 in July from 52.4 in June, marking the lowest reading since February 2013. Domestic demand remained weak due to pre and post-Brexit uncertainty. In addition, a weak order book and rise in cost inflation indicate further near-term concerns for manufacturers.

As per the US Commerce Department, the US economy grew at 1.2% in Q2 2016, below the forecasts of 2.6%. Growth for Q1 2016 was revised down to 0.8% from 1.1%. Consumer spending grew at 4.2% in Q2 2016, the fastest since Q4 2014. However, business investment, which includes stock, supplies, equipment and buildings, fell 9.7% in Q2 2016.